Fred Smith, while a student at Yale, came up with the concept of Federal Express, a national overnight delivery service. The U.S. Postal Service, UPS, his own business professor and, virtually every delivery expert in the U.S., doomed his enterprise to failure. Based on their experiences in the industry, no one, they said, will pay a fancy price for speed and reliability.

The first key to innovation is the ability to think beyond conventional paradigms and to examine traditional constraints using non-traditional thinking. You have to be able to go outside your own frame of reference and find another way of looking at the problem.

The second key to innovation is to be able to discern the important issues and to keep your goal in view. Fred Smith said he didn’t understand what his real goal was when he started Federal Express. He thought he was selling the transportation of goods. In fact, he discovered what they were really selling was 'peace of mind.' After he figured it out, he made it possible for customers to track packages right from their desktops.

The Postal Service and UPS got in trouble when they confused the means as an end. (emphasis supplied)

In the past decade or so, business schools have discovered that design and creative thinking complement the mechanics of business making. Like the example here, I think it's because the forensics aren't always straightforward. Design is not merely descriptive - as if it were clear what anything one thing is on its own - but brings human-readable language like elegance, tension, compactness, beauty and desire into view.

It's a start. And an understanding of overhead, capital expenses, cash flow and competing business models, is, of course, indispensable. But I have this fantasy that one day C-level suites will be filled with writers and sculptors, carpenters and clerics, engineers and philosophers, people who can account for old problems in new ways, who make the unexpected connection because the line from business model to sale is rarely direct, and, above all, who never confuse means and ends. Those margin-makers start with the spreadsheet.